Exam 19: A Macroeconomic Theory of the Open Economy

In the open-economy macroeconomic model, if the U.S. interest rate rises, then U.S.

When a country experiences capital flight its

Refer to Depositors Move Funds Out of Greek Banks. What happened to domestic investment? Why?

Which of the following would do the most to reduce a trade deficit?

Suppose the U.S. removes an import quota on steel. U.S. exports

When the U.S. real exchange rate appreciates, U.S. goods become

If there is a surplus in the market for loanable funds, the resulting change in the real interest rate

Other things the same, a decrease in the real interest rate

If the exchange rate falls, U.S. residents pay

If the quantity of loanable funds supplied is less than the quantity demanded, then there is a

Because the open-economy macroeconomic model focuses on the long run, it is assumed that

Which of the following would make both the equilibrium real interest rate and the equilibrium quantity of loanable funds decrease?

In 2002, the United States imposed restrictions on the importation of steel into the United States. The open- economy macroeconomic model shows that such a policy would

According to the open-economy macroeconomic model, if the U.S. government budget deficit decreases, then both U.S. domestic investment and net capital outflow increase.

If a country's government moves from a budget deficit to a budget surplus, which curve in the market for loanable funds shifts and which direction does it shift? What happens to the interest rate?

In the open-economy macroeconomic model, if foreign interest rates rise and the U.S interest rate stays the same then, U.S.

In the open-economy macroeconomic model, a decrease in the domestic interest rate shifts

When a country experiences capital flight, which of the following rise?

Suppose that the U.S. imposes an import quota on lumber. The quota makes the real exchange rate of the U.S. dollar

A country has national saving of $90 billion, government expenditures of $30 billion, domestic investment of $50 billion, and net capital outflow of $40 billion. What is its demand for loanable funds?